Regulatory costs must be reduced and innovation must be encouraged if the financial services industry is to reach the masses, according to Lord Deben.
Speaking at the Association of Professional Financial Advisers annual dinner in London last night (22 November), the chairman of the trade body said the industry had already come a long way but there was further to go to reach more people with good financial advice.
Echoing remarks made earlier in the evening at Plaisterers' Hall in London by Chris Hannant, director general of Apfa, who said: "The challenges of unlimited liability and cost of regulation will be with us for quite some time to come", Lord Deben said the industry had a duty to reduce cost and complexity for the average consumer.
Lord Deben said: "The cost of advice has to be paid by somebody. The government does not understand that every single penny spent on regulation comes from the consumer.
"Secondly we cannot go on having a system where the ordinary people who need ordinary products, such as basic insurance, are not getting what they need and these are the people who are in effect paying the most and benefiting the least."
According to Lord Deben, the power or will of the industry to create simple, low cost products to meet these basic needs has also been curtailed by a regulatory regime that appears to have discouraged innovation.
He told attendees: "This is an industry that needs investment, new blood and new ideas and we must be careful lest we make innovation all but impossible because of regulation.
"As a minister the three worst words I dreaded to hear were 'Better not, minister'. This meant that you might have suggested an innovation that might have led to trouble and might have ended up with somone being blamed.
"But we must meet people's needs and problems with innovation. The regulatory system must not say no just because it is easier and safer."
He hailed as successes of 2016 a commitment to lessening the financial burden of funding the Financial Services Compensation Scheme, and the Financial Conduct Authority (FCA) committing to reduce the complexity of the FCA handbook.
"We are pleased that, for the first time in our discussion with the regulators, we are seeing people admitting that there is a problem and they are committed to addressing these issues, which is a good thing."
He also touched on the issue of unlimited liability, which he said Apfa was still committed to removing.
Earlier at the Apfa conference, Lord Deben had told delegates they needed to "Lend a shoulder to the Apfa wheel".
simoney.kyriakou@ft.com
